Correlation Between Hyundai and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Hyundai and International Consolidated at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hyundai and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and International Consolidated Airlines, you can compare the effects of market volatilities on Hyundai and International Consolidated and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hyundai with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and International Consolidated.
Diversification Opportunities for Hyundai and International Consolidated
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and International is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Hyundai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hyundai Motor are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Hyundai i.e., Hyundai and International Consolidated go up and down completely randomly.
Pair Corralation between Hyundai and International Consolidated
Assuming the 90 days horizon Hyundai is expected to generate 30.54 times less return on investment than International Consolidated. In addition to that, Hyundai is 1.03 times more volatile than International Consolidated Airlines. It trades about 0.01 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.37 per unit of volatility. If you would invest 253.00 in International Consolidated Airlines on August 31, 2024 and sell it today you would earn a total of 53.00 from holding International Consolidated Airlines or generate 20.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor vs. International Consolidated Air
Performance |
| Timeline |
| Hyundai Motor |
| International Consolidated |
Hyundai and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and International Consolidated
The main advantage of trading using opposite Hyundai and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, International Consolidated can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in International Consolidated will offset losses from the drop in International Consolidated's long position.| Hyundai vs. Fast Retailing Co | Hyundai vs. Retail Estates NV | Hyundai vs. Vishay Intertechnology | Hyundai vs. Micron Technology |
| International Consolidated vs. RYANAIR HLDGS ADR | International Consolidated vs. Southwest Airlines Co | International Consolidated vs. Superior Plus Corp | International Consolidated vs. NMI Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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